THE IMPACT OF MAIZE SUBSIDY POLICY ADJUSTMENT ON MACRO ECONOMY ——ANALYSIS BASED ON CGE MODEL

Wang liang;Huang Delin;Jin Ye;Cai Songfeng;Institute of Agricultural Economy and Development, Chinese Academy of Agricultural Sciences;School of Finance and Economics, Tibet University;State Information Center;

maize subsidy;;policy;;Computable General Equilibrium model;;macroeconomics;;impact

This paper aims to explore the impact of changes in the subsidy policy for the maize industry on national macro economy and food security, both in a quantitative manner, in order to find a reasonable direction for policy adjustment. We improved the existing Computable General Equilibrium Model in China, and introduced inventory accumulation, temporary stocking/selling, inventory to sales ratio and profitable pricing mechanism, along with a physical maize quantity module, updated the database with data from 2012 China Input-Output Table, Ministry of Agriculture and Rural Affairs documents, and China Statistical Yearbook; and simulated the consequences of maize subsidy reduction policy in agricultural sector by setting a policy simulation scenario. We found the results were shown as follows. Reduction in maize cultivation subsidies impacted both maize acreage and output. In the short term, reduction in subsidies eased the financial pressure of the government; yet in the medium to long term, such reduction had a negative impact on GDP which was far greater than the savings in financial subsidies. However, fluctuations in maize-related industries had a minor impact on the macro economy due to its small share in economic volume. In summary, market-oriented reform of maize pricing should be exercised, timely and pertinent policy formulation be valued, and information monitoring and early warning be strengthened, so as to achieve the goals of destocking, restructuring, acreage reducing, and consequently make market-oriented decisions. The strengthening of governmental macro-control ability and implementation of multi-pronged policies in the maize sector will benefit macroeconomic improvement, and keep the agricultural sector in a sustainable and healthy track.